Bogdan Tudorache

An eventual merger of the CE Oltenia with Hidroelectrica would affect the performance of the hydro energy producing company, making it impossible to list, according to the officials of Fondul Proprietatea (FP), owner of minority packages in both companies.

This week officials from the Ministry of Energy reiterated the idea of saving CE Oltenia by merging with the most profitable state-owned energy company, Hidroelectrica. According to some sources, a possible merger would mean the redemption of the FP packages held in both companies, worth over 1 billion euro.

„Firstly, the legality of such a proposal is highly questionable. A business combination of this nature would present concerns regarding state aid and would also be anti-competitive in nature. Second, simply transferring the profits of Hidroelectrica to CE Oltenia does not represent a solution to redress the latter. CE Oltenia finds itself in an unfortunate situation, being unable to pay for the CO2 certificates, and what it needs is a thorough restructuring, which should begin rather sooner than later. Otherwise its future will be severely jeopardized,” FP officials told energynomics.ro.

”From an economic perspective, it does not make sense to merge the two companies, as they are situated on completely different levels of profitability and efficiency. Therefore, a merger could only bring down Hidroelectrica’s performance, effectively nullifying any chances for its listing on the stock exchange. No rational shareholder would ever endorse such value destruction. Furthermore, the contribution of Hidroelectrica to the state budget through corporate income tax and dividends would be greatly reduced, if not wiped out entirely, thus leaving an even bigger hole in the budget than is currently the case,” they added.

Coal and hydro power cannot produce the same level of profit and bringing them together in the same company is certainly not the solution for ensuring the survival of coal-based power generation during the so-called energy transition, expected to last for the next two or three decades.

”None of the two companies, neither the State, the Romanian energy sector or the Romanian consumers, who are also the ultimate owners of these assets, would benefit from delaying CE Oltenia’s restructuring at the expense of reducing Hidroelectrica’s profitability.”